HR Managers now personally liable for workplace breaches

HR Managers now personally liable for workplace breaches

19 August 2016

In a speech to human resources managers on the 27 July, Fair Work Ombudsman, Natalie James said that non-compliance with federal workplace laws had become a "cultural norm" in some parts of the labour market.

"If any of you have ever had trouble persuading your board or your CEO of the merits of your advice, I'm here to give you the new pitch – compliance with workplace laws is not simply a question of tick and flick," she says.

"If it's sitting at the green light end of a risk matrix, you may want to consider what assurance you have put in place, not just with respect to the company's own workers, but with respect to its labour supply chains. Who's emptying the bins or staffing the counter downstairs? Are you sure they are being paid correctly?

"Those involved in the decision making around the strategy for and compliance with workplace laws are on notice. You can find yourselves personally liable for the actions or inactions you help the company take."

Higher penalties for better accountability

Highlighting increased penalties against employers proposed by the Coalition, she said the regulator took a "dim view of deliberate, systemic, exploitative or opportunistic non-compliance".

"Just like employers, we expect advisors to take their responsibilities seriously," Ms James said.

"If you know that your employer or client is running two sets of books or keeping false records or not paying the employees their full entitlements, know that the new higher penalties may soon extend to them, and to you."

Upon finding exploitation of vulnerable workers, she said the regulator's standard practice was to examine the supply chain and look at the contribution an established, profitable company has made to the conduct

"The company at the top of the supply chain, or the centre of a franchising network, is often controlling the settings, including how much money is going into the supply chain or network," she said.

"In some parts of our labour market, I'm afraid to say, non-compliance with workplace laws has become a cultural norm.

"The common characteristics are: low-skilled work, price-driven procurement, a proliferation of entities in the supply chain or network, tight profit margins and vulnerable, often migrant workers.

Take responsibility

She told the managers that they might regard these workers as not their legal responsibility.

"And you may be right or not," she said. "We have taken action against non-employing but benefiting entities in supply chains.

"But even if you are, on balance, comfortable with the legal risk your company or client is taking on, that's not the end of it."

She said companies should think beyond narrow legal risks to brand and reputation "because the community expects better from established, profitable companies."

"The community reaction to hearing that such companies are benefiting from black market labour is swift and strong," she said.

"It doesn't matter whether the workers, are engaged via franchising, outsourcing or labour-hire arrangements. The community expects business to take responsibility for its labour, regardless of where strict legal liability begins and ends."

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Related article: What Business Owners and HR Managers must know about personal liability